Foreign Affairs Minister Murray McCully is demanding a "fulsome apology" from Phil Goff, after the former Labour leader accused a longtime friend of Mr McCully of failing to disclose a conflict of interest.

In 2009, Mr McCully appointed Peter Kiely, an Auckland employment lawyer, to the board of Pacific Forum Lines (PFL), a shipping company which was partly owned by New Zealand at the time.

Mr Kiely is a National Party member who has provided legal advice to Prime Minister John Key, who yesterday acknowledged the pair were friends. Mr Goff tabled documents in Parliament yesterday, showing Mr Kiely was a shareholder in Sofrana Unilines (NZ) Limited, a rival of PFL, until August this year.

According to Mr Goff, the Ministry of Foreign Affairs and Trade had told him that Mr Kiely had not advised it of the shareholding in Sofrana. In Parliament, Mr Goff asked Mr McCully whether this was appropriate "when Mr Kiely was involved in giving advice to the Ministry of Foreign Affairs and Trade on the sale of the Pacific Forum Lines and that the preferred bidder was the Sofrana Shipping Lines".

The Samoa Government eventually exercised its right to buy PFL in September.

After taking time to research the claims, Mr McCully dismissed them as "reckless, cowardly and wrong".

The shares Mr Goff had referred to were held by Mr Kiely as a non-beneficial trustee for a Sofrana employee.

"There was no obligation for Mr Kiely to disclose such matters to the ministry when he was appointed a director . . . There has never been a requirement for lawyers to disclose clients' interests."

He demanded Mr Goff make a "fulsome apology" to Mr Kiely, or make the allegations outside Parliament, where he would be exposed to defamation claims.

Mr Goff said Mr McCully's outburst was simply an attempt to divert attention.

The Crown's Owner's Expectations Manual stated that directors must disclose any relationships which could create even a potential conflict of interest.